Is it game over for online estate agents?

Pandemic uncertainty could be the final nail in the sector's coffin..

The latest data on current and historic listings by online agents suggests the sector could be in serious trouble, despite their potential ability to better traverse the problematic landscape caused by the current pandemic when compared to bricks and mortar agents.

GetAgent.co.uk has been tracking the real-time health of the UK property market as a whole via its interactive dashboard, along with a market sentiment survey of both agents and home sellers and buyers; the latest of which is due for release this week.

The data shows that the estate agency profession is having it tough right now with no listing appointments permitted, no viewings and few completions unless they are subject to ‘specific unavoidable’ circumstances. Revenue has all but dried up and most agency staff have been furloughed.

But, amidst this downturn, there is one segment of the industry that is having it even worse and that’s ‘online estate agents’.

Latest market data suggests that: –

PurpleBricks’ new monthly listings, as the flag bearer in the online agency space, peaked way back in April 2018 at 6,358 in that month.

Since then, their new listings rate has declined to a pre-Corona average of 4,400 per month (January and February 2020 avg). Importantly, in overall market share terms, PB’s share versus the entire estate agency sector has dropped from a peak of 4.25% in August 2019 to just 3.45% now.

What does that also mean for revenues? The drop in listings for which PurpleBricks earn an average £1,100 means that they are on course for a comparable reduction in calendar year on year revenue of c.£7.8m per annum (or 11%) when they next report (total 2018 listings of 65,279 vs total 2019 listings of 58,162 x £1100).

But the real focus will be on current listings performance which has simply got worse even before factoring in the decline in new business as a consequence of the lockdown.

At just 4,400 listings per month now (vs a 2019 monthly avg 4846), this is a further dilution in revenue of an annualised £6m. CEO Vic Darvey’s quest for 10% market share is, in reality, experiencing a significant backward step.

Total market share for all online estate agents has dropped from a peak of 6.35% in September 2018 to just 4.8% now (February 20).

Total listings ’lost’ by online estate agents in 2019 compared to 2018 was 17,286.

YOPA – listings are down 21% year on year and their market share is down from 0.65% to 0.61%

HouseSimple – listings are UP 156% year on year and their market share is up to 0.61% from 0.21%. However, this increase is at the expense of actual revenue given that they became a free service in 2019.

The online estate agency sector has raised approximately £300m in equity funding to date from the likes of Neil Woodford, Charles Dunstone, ToscaFund, Savills, the Daily Mail General Trust Group and the Barclay brothers. Many could be forgiven for thinking, what for?

“Estate agency as a whole has never been short of its critics but this criticism certainly seems to have shifted towards online and hybrid agents over the last few years.

This is always going to happen as an industry evolves and there is no doubting that the online model provides a very cost-effective method of transacting when compared to the traditional agent.

However, this more DIY approach to selling does have its pitfalls. Many customers feel as though they’ve been left a little high and dry when it comes to the completion of a sale and that they didn’t achieve the price they would have otherwise.

This seems to have had a knock-on effect on the popularity of online agents with even the industry leader, Purplebricks, seeing a steady decline in business.

With yet more uncertainty now shrouding the market, it’s likely that many home sellers will value the professionalism, service and accountability that comes with a traditional agent and the online market share will continue to suffer as a result.”